Medical marijuana centers cost Boulder more than they bring in?

Last week, Boulder City Council extended a nine-month moratorium on new medical marijuana businesses. It was a surprising move for a community perceived as medical-pot friendly. But senior assistant city attorney Kathy Haddock argues that it was necessary due in part to the belief that MMJ is not nearly the cash cow it's advertised as being.

Haddock hasn't personally crunched all the data, and even if she had, her expertise isn't in budgeting. Still, she suspects that "it's not a matter of whether we're in the red, but how much we're in the red.

"My fees alone, if we put a number on them, as the city does for its internal calculating, take up half of the fees paid by the businesses. And even though my work on this is a lot, it's not half of the total work the city does. It's much less than that. And knowing how much more time other people put into this, and seeing some of the analysis from other departments, there's no question the impact has been very broad and much more than anybody anticipated -- and very intense, with the glut of applications."

The set-up costs alone were staggering, Haddock notes.

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"We had to write our regulations because the city council directed that we go ahead and allow these businesses before the state had written its laws," she points out. "And the way the state law was written, they don't even start looking at the businesses until the local governments decide to issue a license -- and they don't look at things like zoning and land use. They do inspections for security issues and things like that, but they don't have to do all the building review things, like fire-suppression stuff, that happens at the city level. The city's staff is involved in those things, and it's been overwhelming at times."

Wouldn't sales tax offset some of these expenses? Not by Haddock's calculations. "Sales tax isn't supposed to cover cost related to a particular program, but the peripheral things government has to do to support businesses -- like law-enforcement responses and the cost of keeping up the streets, so people can get to dispensaries. It's not supposed to reimburse the city for the cost of running one particular type of business."

Hence, the moratorium, which Haddock characterizes as "not just a breather -- it's a pause on the activity, so we can do some analysis. Because otherwise, we're trying to do analysis on a moving target, and we don't have the resources to do that and process applications at the same time."

Page down to see more details about the reasons behind the moratorium. Here's the list of the city's argument on behalf of a moratorium, from a council agenda item on view below in its entirety:

A moratorium would allow the council time to consider additional limitations on medical marijuana businesses, including (1) whether to limit the total number of licenses in Boulder; (2) whether to prohibit grows serving dispensaries outside of Boulder; (3) the impact of grows on the availability of industrial land in Boulder; (4) city resources necessary to properly regulate these businesses; (5) the effect on Boulder of neighboring municipalities deciding not to allow medical marijuana businesses or only allowing dispensaries; (6) the effect of the state medical marijuana enforcement being 2-5 years behind where they anticipated being at this point; (7) determining the appropriate amount of fees for applications, because the current fees have not covered the city's costs of reviewing applications; (8) necessary changes to the code to adequately regulate medical marijuana businesses in a manner that will be enforced by Boulder courts; (9) how to protect the city in view of recent and pending court decisions finding that the federal government has pre-empted the city's regulation of marijuana in several areas; and (10) to see how courts will enforce the city's laws in pending cases.

The sudden federal interest in medical marijuana businesses in Colorado, exemplified by U.S. Attorney John Walsh's seizure threat to 23 dispensaries near schools, is a particularly important factor, Haddock believes, since it "puts the city in a difficult position with respect to regulation. Not that the city would stop licensing medical marijuana businesses, but there may be some changes we need to make so that we're safer from legal challenges, or would be more likely to prevail if there were a legal challenge against what the city is doing."

In addition, she continues, "we need time to analyze the impact of medical marijuana taking up all the industrial space in the city," as well as to consider saturation limits not only for dispensaries, but also grows and marijuana-infused-products businesses, shorthanded as MIPs. According to the city's calculations, there are currently 75 licensed medical marijuana businesses in Boulder: 32 dispensaries, 37 grows and six MIPs. On top of that, twelve license applications (for five dispensaries, five grows and two MIPs) still pending from the 119 submitted as of late December. Haddock stresses that the dozen remaining aps will be processed despite the moratorium's passage.

When asked if she's heard as many positives as negatives about the moratorium, Haddock jokes that "I only get the complaints." However, she concedes that "there's no reason for existing businesses to complain, because they've been protected from new businesses coming into the city until November."

Here's the aforementioned agenda item.

City of Boulder City Council Agenda 204-212

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More from our Marijuana archive: "Medical marijuana: Did Boulder's publication of a map showing grow locations violate the law?"

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